Is it too late to set up a traditional IRA and do a non deductible contribution for 2024 and 2025 and then do a back door ROTH conversion for both years a few days, weeks, months later? I have read mixed information regarding timing and how to avoid step transaction misconduct

I have no other IRA accounts and am over the income limit to contribute directly to a ROTH

For tax purposes, the contribution to the traditional IRA would be on 2024 taxes but the conversion would be reported on 2025, correct? Does this trigger any negative tax implications if I convert immediately but can’t report the conversion until the following year?

Thank you for your help! I have learned so much from this community

So I made the leap of faith and quit my high stress, high hour $400k TC job to take a low stress, 40-hr job at about half the TC.

Problem is that it involves a relocation so my housing costs will increase (current <3% mortgage) to a point where income will be really tight for at least the next few years until raises/promotions ease the income crunch.

Fortunately, the former high TC job and home equity appreciation enabled me to build up some decent savings to help weather the storm. I had originally planned on dumping all of that into the next house to minimize the new ~7% mortgage, but now I'm thinking I'll need to rely on some of that cash to fund monthly liabilities for a few years. I could probably put down 20% on the new home and still have liquid ~$100-200k cash.

The biggest monthly expense after the mortgage is going to be private school for 2 kids (one will just be for the next 4 years but the other will be much longer since he's a lot younger). Annual cost averages ~$30k for each. I'm thinking that what will make the most sense will be taking the extra cash and dumping it into 529 plans on a 60/40 stock:bond ratio and drawing the tuition from that. I won't get the tax deduction on the contributions since I don't live in a state that allows that, but at least the gains would be tax free.

Given the high withdrawal rate, i think the funds will be depleted in a few years but by that point I should hopefully be back in the green on a monthly basis from the day job. This also doesn't factor in my wife who could go back to work.

Any thoughts or suggestions?

EDIT: thanks to the commenters that pointed out there is a $10k annual max on amount you can pull from 529 plans to fund K-12 tuition

I know a lot of us who live in high-tax states got hit quite hard when this cap was instituted. The cap is set to expire soon and the new congress has to decide what to do with it. If you are someone who has been affected by this, you might consider expressing this to your representatives (particularly if you are in a red/purple district).

Given how tight the congressional margins are, and the fact that some in the majority are already asking for SALT relief, there's actually a pretty good shot that the cap will get raised, if not entirely eliminated.

EDIT: I don't mean to get political. But given that this is a piece of economic policy which could affect us, and there is a very real chance that enough voices could affect change, I thought it would be a good idea to inform everyone that's all.

The normal consensus is that if you have debt under a certain percentage it’s better to keep it rather than try to pay it off early. That percent is different for everyone. I recently heard someone saying that they don’t pay down their 6.5% mortgage because the effective interest rate is less than that since they itemize deductions. Can anyone explain how that works ?

Every year I'm pushing my 401k contributions to 70 percent for a few paychecks at the beginning of the year (basically front loading as much as I can), and adjust it to be lower so that I can capture this sweet employer match till the end of the year.

Today I got a somewhat unplanned 16k bonus, and 11k of it went directly into 401k, which is great, but it also means that I'll be maxing my 401k by end of February and wouldn't receive employer match till the end of the year since then, which is more than 6k in "free money".

All because f*cking Insperity doesn't have True Up feature on their plans.

With that being said, it's such a comical situation that I'm actually happy I'm having to deal with it 🤣

I own a high revenue, growing business with a business partner. I know its value in the current private equity space though am not actively selling. My business partner and I also own some commercial property that we lease out. I generally do not count my business in my net worth because it is not realized, is not liquid, and not fully in my control (meaning partner has 50% of decision making). Wondering how other business owners handle this when considering where they stand in terms of net worth?

What assets would you count vs not count?

For example, obvs there are cash balances in the business accounts. I could conceivably count those if I think of suddenly closing up shop today, paying out liabilities and taking the balance- possible but not what is happening and highly improbable that would ever be how the business would go down if it failed. There are assets that could be sold but not where the real value of the business lie. The real estate is a bit easier to figure and sometimes I do count it loosely in assets. But the big value in my business would come from selling it while it is healthy.

I think for me a part of why I am NRY is that I do have a lot of cash flow tied up in the business and the real estate, so my personal accounts don’t look very healthy compared to what I make/pay taxes on every year. So if I don’t count the business I’m left with always feeling way behind.

But if it’s not parked in my personal account, it feels risky to rely on it. Anyone else feel this way? How do you count yours?

NW: 1.3 million in personal accounts and personal property equity

HHI: 750k taxable income

DINK, MCOL

If I sold my businesses today: NW : 3.8 million post capital gains

TLDR: If it looks like a HENRY and lives like a HENRY. . .

My younger brother (35/M/SINK) lives in a HCOL coastal city and has spent the past 3 years as a Finance executive, after starting his career out of college in public accounting. He has done all the right things financially, and recently paid off his condo he purchased in 2019 and Acura sedan he purchased in 2022.

His Gross income (2024) - $200K+ 12.5% bonus, 401k match 6%, 401k balance over 150k, maxes Roth contributions, and has been active over the past year in crypto. Describes himself as a saver and investor first, second, and third.

His current gf (27/F) works as a waitress at a restaurant (that is where they met), and shared with him during the first 3 months of dating she has roughly 120k in debt between student loans and her Audi car payment, and lives off her Amex card, paying it down with the tips she makes from work.

They could not be any different.

He asked for advice on whether he should help her pay off her debt, as they have talked a little about her possibly moving in at the end of the summer when her lease expires.

Questions to the community:

1. Would you marry someone with massive amounts of debt that you did not have?

2. Would you marry someone that did not have the same financial mindset (spender vs. saver) as you?

Just input our W-2s to estimate taxes and it looks like we're going to owe about $45k. Much of this is due to under-withholding on RSUs vesting.

How do you avoid this situation? Do you just eat it? We barely qualify for any credits or deductions right now due to high income and lack of a mortgage (we rent). Any tips?

Sigh...

I've been following this sub for years and have occasionally participated. Now, I find myself at a bit of an inflection point in life. I'm 44, single, and working in government, earning $160K (W-2) plus an additional $20K–$22K in interest income.

Earlier in my career, I worked in sales (mostly financial services) before transitioning into audit and financial analysis, where I’ve spent the past 13 years. However, it looks like my time in government may be coming to an end, and I’m starting to think seriously about what’s next.

Has anyone here successfully transitioned from government to the private sector? I’m concerned about the challenges of making the switch but know that I want to continue growing my income over time. The challenge is figuring out the right path.

I’m open to learning new skills if needed and believe I have at least one major career pivot left in me. I’ve always been inspired by the success stories and income levels shared here, and I’d love to position myself for similar opportunities.

I'd be lying if I said I wasn't worried about how this may all play out. But I am trying my best to be optimistic.

Any advice, insights, experiences or ideas on potential career moves, skills to obtain or industries/careers to consider would be greatly appreciated!

Hi. I’m relatively new to the HENRY subreddit and have been reading through the “Steps of investing” posted here in this thread. I’ve seen various versions, but generally, they all have the same investment vehicles. Something I haven’t seen included, though, is variable life insurance.

I’m in the process of getting term life insurance for me and my wife and have spoken to a few insurance agents. They educated me on variable life insurance, but I don’t see anyone recommending that in this thread, so I’m still leaning towards term life insurance. Is there a reason variable life insurance isn’t a good option, and no one has it included in their steps of investing?

The way I think of insurance is just that insurance and not an investment. Maybe that’s the wrong way to look at it. Any advice or insight would be much appreciated.

Wife and I are mid 30s, my income ~600k and hers ~200k. Two small children (toddler and infant). ~800k NW currently. Retirement accounts all maxed (including backdoor Roth x2) and ~100k in brokerage account. 3 years in on a 30 y mortgage in a HCOL area.

Over the past year we have tried to make sure we have our finances in order and the one thing we can't agree on is life insurance. Wife's parent passed away when she was young after purchasing a policy. Have tried discussing ad nauseam about why I think it is important for her and our kids - but she refuses mostly out of fear. Also argues that we are both high earners (as our each of our siblings) and thinks that the surviving care giver would have enough to manage.

Questions:

1)Do we really need life insurance?

2)Thoughts on how to convince her?

I am a tech exec and — like many here, I’d guess — a recovering workaholic. I care a lot about being successful at work and unfortunately also care about being perceived as successful (which has a narrower definition in high-growth tech).

I’ve realized that when I lost my job I had an identity crisis bc that is so much of how I think about myself — and honestly I hate that. I have hobbies, but I really struggle to find that level of purpose and commitment that I have at work outside of work.

So - what do you do outside of work that feels important and worthwhile and core to who you are?

My wife (38F) and I (33M) have a combined income of $305k ($185k + $120k) and max out our 401(k)s with 6% employer match and backdoor Roth IRAs annually. Our 401k balances are at $250k (her) and $150k (me), plus we have $125k in a brokerage account that we contribute $10kish annually into “safe” index/mutual funds. We also have a $50k emergency fund in a high-yield savings account. We have no debt besides a $450k mortgage at a low 2021 rate. No car loans, not going to have kids, and we’re happy with our home and area.

Any blatant blind spots I’m missing?

Hey HENRY's! I'm High-income ~$300k-$400k annually with additional stock grants from my work. I have $1M in Net worth, a possible $4M windfall in the next 5 years, and a possible additional $3M inheritance windfall in the next few decades.

I plan to marry in the next few years, and then have kids. I'd like to quit my job and focus on raising said kids.

My future spouse loves their career and plans to keep working, however I'd like to stop my career to focus on child-rearing. After the kids become self-sufficent, I plan to go into an alternative career for fun and enjoyment, with little to no focus on being a high-earner since I will have quite the padding behind me. I want to contribute to this marriage with my unearned income, AKA money I pull out according to safe withdrawal rate and market conditions, but I want my assets protected.

Is this possible to do with a prenup or revocable trust? Thank you!

I just recently (in the last year and a half, in fact) became a high earner, having switched from public service to FAANG (we’re in our early 30s). This past year, I used my RSUs and savings to pay for my wedding and my grad school, so no debts. With my husband (who is remaining in public service) we make mid $400K (does this makes us HENRY).

We max out our 401K (and my husband is also vesting in his pension) and I’m also exploring now the Mega Roth backdoor offered via my company. We also have about $50K in brokerage (I hate myself for opening a chase brokerage account less than a year ago and paying 1.5% fee - planning to learn how to move the money so I can manage myself via Schwab or Fidelity).

We live in one of the most expensive cities in the US and would love to replenish our savings accounts for a house purchase in the next 3-4 years.

2025 is the year of savings for us (especially as we plan for a child) so the plan is to put all of my RSUs and bonus for this year into savings (and to do that for the next 3-4 years). We’re looking at a total of $80,000/year post tax. I was thinking of just moving the money to HYSA with SoFi but is this a good decision? Any other suggestions and advice you have to grow this money? Or should I just have my RSUs vested, keep and not sell every quarter (my company is currently doing incredibly well)?

My goal for February is to gain knowledge in investments tactics and really develop an investment strategy that I can manage on my own (for a house purchase but also wealth building). Appreciate you all for the wealth of knowledge or any thoughts you can share with me!

Do any of you have advice for getting extra work as a contractor or something along the lines? I have 5 years of S&O consulting experience and have a lot of down time at work. I would love the opportunity to get some extra contracting work for small startups or groups that may need it. Are there websites to find these kinds of opportunities? Any advice welcome!

Trying to figure if what our advisor is recommending is the best strategy for our taxable account.

We are in a HCOL city/state.

We both max out 401k. It looks like I am eligible for a mega backdoor roth so I plan on exploring that.

We currently don't contribute to an HSA due to 3 young kids with some previous health issues and we have met our out of pocket max with our insurance the last few years. Everyone is now healthy so may consider HSA soon moving forward.

No debt other than mortgage with a good interest rate from 2020.

Retirement assets (401k, Roth and IRA) about $1.3M mostly low cost index funds.

Additional funds go into our taxable brokerage account and we currently hold almost all municipal bonds. See below:

Taxable Brokerage Account - 23.3% - $390k

• Ultra Short Term Tax Exempt VWSUX - Admiral - $81k 5.3%
• CA Intermediate Term Bond Fund VCADX- Admiral - $236k 12%
• CA Long Term Tax Exempt VCITX - $39k 1.8%
• CA Money Market VCTXX - $29k 1.9%

Is this too bond heavy? We are open to some risk so should we consider putting more money into low cost index funds/ETF's?

Current asset allocation across retirement and taxable brokerage account is roughly 3% cash, 23% bonds, 74% stocks.

Edit - Advisor is recommending to continue investing additional funds in municipal bonds. Long term financial goals are to maximize returns and save for college/retirement etc, eventually allowing for one of us to move to more part time work to spend more time with kids.

Early 30s. NW is 1.7 MM + 1MM of private RSU where my company does private sell events.

Yearly earnings are 800-850k, about 350 - 400 is cash, rest is private RSU.

Rent my place, so no mortgage. Only debt is my $700 per month car lease payment.

When do I become rich?

We are car shopping and we are looking for a large SUV. And it’s absolutely jaw dropping at how expensive vehicles have become. If you drive a nice car, how much did you spend? How much do you make? Did you pay cash? Finance it? (Note I’m in Canada, all prices are in CAD below).

A base model x5 is 105k CAD, with interest rates being anywhere from 5-8%, and payments basically starting at $1700/month.

Our HHI is about $550k, and we think this is insane, so who is buying these?!

The car we really like is the Mercedes GLS, but that is like $145k and payments starting at like $2200. If you drive one of these - how much do you make and did you just buy it cash?

I know the financially prudent thing to do is pay cash for a Toyota - and we may end up doing this. I think we just struggle with the psychology of taking a huge chunk of money out of savings vs managing the cash flow of a payment.

Would really love some other thoughts or opinions.

Doing our annual spend for last year and I am curious for those that have kids what you spend on them.

We have three young kids with oldest being 9. Between activities, birthdays, camps and other random stuff we spend about $30k a year. Should note roughly $18k of that is for tennis for one kid. Thankfully others are not in as expensive sports…yet. Doubtful will be tennis also.

And another $12k on part time help.

Right now, I'm 16 years old and a junior in high school. I've been trying to get a job for close to a year now and l've got nothing so my next decision is I'm going to start preparing myself to be more self sustaining with financial freedom when I reach the age of 18 and take on what I want to do. My problem is that the skills that were in my consideration, I don't know really where to start with them or which one I should pick or if I do pick something, if it'll be good to learn in the long run. I wrote a list of some i was interested in, which was: IT, Programming, Art, Music production, and Website Design. The skills I mainly picked were tech based and recently l've been hearing the market is over saturated and things of that nature which is also another worry I have about choosing any skill. My computer isn't really a high end computer either which cant really handle a lot of things, like running a browser without the slowest of load times which is also why I'm hesitant to start learning a tech based skill. Right now I'm just confused on which and what I should be learning skill wise for my future, and if it'll be worth it in the long run.

I manage all the household finances and want to get feedback on what I'm doing.

Early 30's, HHI in 2024 of $415k (combined base salary of $225k + $190k in commission). Combined base salary in 2025 is $300k and goal is to double that with commission. In 2024 we maxed out 401k's and HSA ($70k with matches) and saved another $60k into brokerage account for a combined $130k saved (31% of gross). One kid (contributed $7,500 to 529 in 2024). We are not contributing to backdoor Roth since we each have IRAs from former employer 401k that haven't been transferred to current 401k and I'm prioritizing brokerage account growth. Combined retirement accounts $475k and another $150k in brokerage. No debt other than mortgage.

Breakdown of monthly budget (budget only accounts for base salaries): Net Monthly Income: $13,500 (% of Take Home) -Mortgage: $4,770 (35.33%) -Daycare: $1,730 (12.81%) -Groceries: $1,300 (9.63%) -Wife discretionary spending: $850 (6.30%) -My discretionary spending: $850 (6.30%) -Home Needs: $500 (3.70%) -Utilities: $400 (2.96%) -House Cleaning: $250 (1.85%) -Wife: Hair/nails/etc. sinking fund: $220 (1.63%) -Kid Stuff: $200 (1.48%) -Car Insurance: $155 (1.15%) -Car Gas: $150 (1.11%) -Term Life Policies ($2M/20 year each): $140 (1.04%) -Streaming / TV / Spotify: $125 (0.93%) -Diapers: $115 (0.85%) -Cell Phone: $85 (0.63%) -Gym: $72 (0.53%) -Public transportation: $70 (0.52%) -Internet: $66 (0.49%) -Transfer to Brokerage: $1,452 (10.76%) Total: -$13,500

Savings goals (in addition to the $1,400 monthly transfer, commission checks fill these buckets in this order):

• Brokerage account: $50k
• 529: $7k
• Vacation fund: $10k
• Future car: $15k
• Mortgage pre-payment / future down payment: $30k
  • In our first home and will live here another ~5 years while we finish having kids ($700k value, owe $460k). In our market, it looks like our next house will range from $1.6 - $2.1M. My preference is to stay put as long as possible and avoid moving to a $1M house for a period of time only to then move again.
• Country club sinking fund: $10k
• Anything that comes in above this combined $122k we spread around however we see fit

Let's assume: you're trying to save aggressively but also be reasonably generous for good service. You're a high earner so each dollar usually means more to whoever you're tipping than it does to you. There are also societal norms that vary according to what is being tipped for.

I tend to keep a few $5s in my wallet for some of these (others are percentages or none) but as inflation kicks in, at some point that is not or will no longer be reasonable. Also social norms change over time.

I am not saying these are all frequent issues, but how much do you like to tip for:

- diner-style restaurant
- high-end restaurant
- Uber/Lyft
- Uber Eats/Doordash
- anything to the waiter beyond an included gratuity, if restaurants auto-add gratuity
- staff when having an event catered
- valet parking
- valet parking if required by the hotel
- performing artists
- doorman who assists with luggage
- coffee house or diner without table service
- barber
- hairstylist
- christmas tip for cleaners
- anything else in your life?

How are you all preparing for the worst-case scenario? I'm sure most of you, like me, will not be satisfied with a slave wage (UBI). How are you interpreting or preparing for this very real risk?

Sam Altman says, "Advancing AI may require changes to the social contract."

Translation: The exchange of labor will no longer be necessary to produce wealth. Most of society will become irrelevant in our current economic model.

P.S. Please don't say, "I can't be automated away because I do X, and no computer will ever do that." That's not true. It’s a real possibility that full employment replacement will happen in the short term. For the sake of argument, let’s assume AI is capable of replacing all jobs.

https://www.threads.net/@timeforainews/post/DFP3Tq4ow5O

I have a llc doing about 3m in revenue and my wife works in the business and gets about a 120k salary. How can I take advantage of this or be better tax wise ?

Have been trying to post a home budgeting question but getting shut down by the automod. I totally get not wanting countless posts about what is the definition of HENRY, but personally I find posts where individuals are looking for advice or perspective on their situation to generate good dialogue. Am I missing something here?

Edit: trigger warning, hard truths, introspection

If you are a high earner with, say, two kids.

You have kids so daycare is 2500/mo/child = 60k a year you’re not paying.

With a stay at home spouse, you can keep up the house without involving external cleaning services, once a week at 250$ a visit. (This assumes you’re not an asshole and also help) = 12k a year

Food for your growing family is expensive and if you both work so you pay a lot for convenience, because it was a hard day and you’re both tired. A stay at home spouse can have a high impact on this as they generally have time to shop and cook, even if it’s just a crockpot recipe. You save at least another 1k a month or =12k here

Your stay at home spouses flexible schedule reduces innumerable other minor frictional costs, better travel planning, pet care, transportation, minor home maintenance, managing of contractors, and many more things I can’t even list, call it another 12-15k here

That’s about 100k in money you don’t spend annually

BUT you’re a high earner in a high tax state and pay 35% total effective tax rate. So to break even, now your spouse would need a 150k salary. Except in that world they’re now stressed out like you and strangers are raising your kids. What’s that worth to you? 50k? 100k? More?

To me that last point has potentially unbounded value but I think I can confidently say your stay at home spouse earns at least 200k.

Background is that we are mid-30s, have 1 kid, soon to be 2 and we live in a VHCOL area. 700k HHI, $300k NW and our monthly spend is around $19k. This allows us to save ~$150k/year post-tax. Our goal is to FIRE in 15 years or so and we are somewhat on track assuming we can maintain this level of income.

As someone who grew up poor, I feel incredibly guilty about our spend though, but also reluctant to change it. Anyone else get what I mean?

The breakdown is:

• $6.6k housing + housing expenses (includes bi-weekly house cleanings)

• $2.2k vehicles - $1.2k is from accelerated payoff of my $40k car. I hate the high interest rate. The rest is gas/insurance, etc.

• $5k childcare - part time nanny + daycare

• $2k food - $1k comes from eating out

• $3k misc - $1k for vacation budget, $400 for our personal spending allowance and the remainder is for unforseen expenses.

Please feel free to roast/critique my rationales as I'm sure I might be delusional in some aspects. Is this a ridiculous budget?

Our justifications for each category:

• Housing is honestly hard to decrease more due to VHCOL, we rent and that helps somewhat.

• Vehicles could definitely be lower by not accelerating payment and going with a cheaper vehicle, but honestly it's done, we keep our cars for a long time, so it should balance itself out.

• Childcare is tough to watch. I know the cost is temporary, but it hurts to put out $5k/month. The nanny was necessary because we needed after school care so I could be present for afternoon/evening meetings as I typically do pickup and would otherwise have to clock out by 4PM. Maybe I can shift my work schedule?

• We try to cook as much as possible but my wife is very big on restaurants as her vice - we've trimmed this down from $3k/month.

• We both have demanding jobs - healthcare + big tech and we've kind of paid to make life bearable. The extra spending is less than our increase in salary due to taking on demanding jobs and 'buying time back', but man, it's hard watch the monthly spend figure.

Any advice on where we can cut back?

could also hire my spouse and max out her retirement contributions, but I don’t know if paying payroll taxes outweighs the benefits of both of us maxing out retirement contributions ($70k). I don’t know if this company will continue this for more than 2 years (my contract is 2 years with potential for renewal), so a defined benefit/pension plan likely doesn’t make sense from my research. Basically, I want to minimize my LLC and personal taxes, the amount of income we take home is not important, and we want to maximize our pre tax contributions while minimizing our tax burden. Is an SEP IRA or solo 401k better if we plan to maximize the employer contribution, and should I also hire my spouse? She does help a lot but off the books for now (basically running the back office)

I don't mean to be alarmist or anything like that, but I'm seeing a lot of news about people readjusting asset strategies to mitigate some US-based risk. What are y'all's thoughts about this?